subject: Can A Short Sale Help Me? Learn More About Your Options [print this page] Property Selling Basics: What is a Short Sale?
According to the National Association of REALTORS (NAR) website a short sale is "a sales transaction in which the seller's mortgage lender agrees to accept a payoff of less than the balance due on the loan." (1) This happens when the seller is unable to satisfy the amount owed on the home because of dropping home value. Once the transaction is complete the lender agrees to forgive the rest of the debt not paid by the transaction.
Short sales, when handled correctly and with professional assistance can offer advantages for all parties involved. First, the seller is able to avoid having a foreclosure on their credit. These types of transactions affect credit but not to the extent that full foreclosure can. Second, the buyer generally gets a home for a better price than it would have been available for in the past. Third, the lender is able to recoup a majority of what is owed on the mortgage. All in all this can create a "win-win" situation everyone feels positive about.
Real Estate Checklist: How to Know a Short Sale is the Right Choice
It is important to remember that even if there are benefits this is NOT a normal property transaction. It can take as long as 30-60 days just to get a short sale contract accepted when dealing with a bank or other lender. This type of property purchase is NOT the best choice for buyers if any of the following apply:
-The sale of the home must happen quickly. For instance, if a homebuyer just sold a home in order to purchase the new one and they must be in their new home within 45 to 90 days a short sale is not a good option.
-A down payment cannot be provided in cash and the buyers have issues with qualifications or financing. Secure financing gives the lender faith the new owners will be able to pay the entire mortgage.
-Repairs and repair credits are important to the buyers. A buyer agrees to purchase the property "as is" when executing a short sale.
-Homebuyers are planning a "do it yourself" purchase. This kind of transaction is complex and requires the assistance of an experienced professional. Short sales are only completed when every detail of the transaction is handled correctly and all demands of the lender are met.
Short Sales Require Plenty of Patience and Reliable Real Estate Expertise
Often advantageous, the way to ensure success is to hire trustworthy, experienced professionals. Most importantly homebuyers need a qualified agent with experience in these transactions. An agent with experience with these transactions will be able to show you available short sale homes, negotiate the price and clearly communicate with the lender. Home buyers will also want the expertise of a real estate attorney familiar with short sales. According to the NAR website only 2 of every 5 short sales are approved by the lender. (2) Title Officers are also helpful during these exchanges. A title search provides the information necessary to avoid any problems later on in the transaction.
Experienced professionals can help short sale buyers and sellers avoid rejection by lenders and any dissatisfactory terms. Success can be achieved when trained professionals facilitate the transaction.
Resources:
(1) http://www.realtor.org/library/library/fg335 (A. Siudzinski, Senior Information Specialist)
(2) National Association of REALTORS http://www.realtor.org/rmosales_and_marketing/handoutsforcustomers/handouts/short+sales+tips+for+buyers
